A business proposal is a document used in sales management to offer specific goods or services to leads at a defined cost. They are typically used by B2B companies to win new business and can be either solicited or unsolicited. Effective business proposals have an executive summary, key project details, and require a client signature.
Free Business Proposal Template
The best business proposals clarify project details, timeline, terms, and cost, and can be treated as an agreement between both companies if they include a signature field for the prospect. Business proposal templates ensure that none of these components are missed, making them a critical tool for any small business. You can download our template or visit our article on what to include if you want to design a template of your own.
Here are the seven steps to writing an effective business proposal:
1. Gather the Information You Need
When a new business opportunity becomes available, those in sales management may feel pressure to get your proposal sent over as soon as possible. While you want to send it sooner rather than later, taking some time to learn about the client and project first will help you craft a proposal that’s more likely to be accepted. This will inform the key elements to include in your proposal and create a more accurate and effective document that results in a closed deal.
To maximize your chances of closing any deal, we strongly recommend conducting a discovery meeting before you deliver your initial sales pitch and create a proposal. You should schedule this meeting before you create the proposal to make sure both you and your customer are on the same page. If you don’t show you understand their main pain points and address their potential objections, your proposal may be rejected or not taken seriously.
Some of the key questions you need to answer before writing your proposal include:
- Who are the buyers? The person you met may not be the final decision-maker. Determine who else may be involved in the process. If possible, ask the prospect to describe their decision-making or approval process.
- What is the pain point? Research your competition to identify potential weaknesses or gaps. Ask the prospect questions about their past experience with similar products or services to identify their pain points and how you can solve them with your products and services.
- Is there a budget? Ask the prospect if they have a target price in mind or if there is a budget for the project. Answering this question will help you avoid wasting time on proposals that have no chance for profit.
- Is there a deadline? Many companies set internal deadlines for purchasing decisions in order to hit production or launch schedules. They also may be motivated to buy at specific times of the year. Ask if they have a deadline to help pinpoint the time frame.
- What is your best solution to their problem? Determine which of your offerings provides the most benefit based on who the buyers are, what they need, what their pain points are, and their purchasing schedule.
- What are your costs if the proposal is accepted? Calculate the costs, such as labor or materials you will incur as a result of your proposal, and estimate the total projected revenue for your company.
Customer relationship management (CRM) systems are used to store and manage your leads and contacts, so it’s the ideal place to manage your proposals too. In fact, you can incorporate your business proposal into your sales pipeline stages to help track your proposal activities and move your prospects through the sales cycle.
For example, Salesforce Essentials allows you to store customer contact information, meeting notes, documents, and emails, all in one place. This makes it easier and more efficient to manage sales activities, including proposals. Sign up for a free trial today.
2. Define Project Objectives & Scope
Just as you develop sales objectives when you start crafting a robust sales plan, the first thing you want to do before outlining the scope of your project is to define the objectives of your business proposal. It’s important that you can articulate your objective so you never lose sight of the reason you’re writing the proposal. This helps shape your outline and your business proposal. It is also a good practice to state the objective, either in your introduction or in the executive summary of your proposal.
How to Define the Objective of Your Business Proposal
To create a proposal objective, ask yourself the following questions:
- What is the purpose of the proposal?
- What are the needs or pain points of your prospect or customer?
- What problems are you solving with your products and services?
- How does your solution solve your customer’s or prospect’s problems?
Once you’ve answered these questions, create a proposal objective statement that is centered around your customer’s or prospect’s needs.
Example Objective Statement
The objective of this business proposal is to demonstrate how _________________ can solve the problem of _________________________ for ______________________________ by ___________________________________________________.
This general objective can be applied in a specific example per the following:
How to Outline the Project’s Scope
The scope of the project is the summary of its deliverables, and should take features, functions, tasks, costs, and schedules into account. This step will define the statement of work (or the “who, what, where, when, how, and why”) as it pertains to your proposal and financial costs. While you can answer these questions in your head, it’s a better idea to write them down as a separate note or record the answers in your CRM before starting your proposal.
To outline the project’s scope, answer the following questions:
- Who: Who will do the work, who will oversee the work, and who does the customer call if there is a problem?
- What: What solutions need to be delivered, what will be required to get it done, what can the customer expect, and what will it cost them?
- Where: Where will the work be done, and where will it be delivered?
- When: When will you begin, when will key milestones be scheduled, when will the project be completed, and when is the payment due?
- How: How will work be done, how will it be deployed, how will it be managed, how will you achieve quality assurance and customer satisfaction?
- Why: Why have you chosen the strategies and alternatives you have selected, and why should the customer select you?
Writing these out will give you a head start since these answers will make up the bulk of the business proposal. It also gives you final confirmation that you have the necessary resources to complete the project—or it will point out any major snags before you get too invested.
3. Calculate Your Labor & Costs
Early on, you want to consider how much the project will cost—and how much to charge the client. Many businesses use a simple formula to estimate their labor costs: Take a mental walk-through of the project and write down the realistic number of hours it will take for each task. Add this up, and multiply it by 1.5. Alternatively, you can also use an estimate template to help ensure you are taking all your direct and indirect costs into consideration.
For example, if you estimate a project will take 10 hours, write it down as 15 hours in your proposal (10 * 1.5 = 15). Why overestimate? This is because projects often have unforeseen twists and turns, and adding this extra time will help account for any potential obstacles and build in a contingency budget.
Plus, if everything goes smoothly and you wind up below your estimated hours, you can always offer bonus work, or bill your client a lower amount. Both will result in delighted customers.
4. Begin Drafting Your Business Proposal
Now it’s time to dive into the actual proposal document. Proposals tend to follow a loose formula. They start with an introduction that summarizes your business and the project, followed by a body that goes into all the details (including a pricing table, photos, and charts), and a conclusion that tells the customer how to proceed.
Including the signature page, good business proposals should have between six and seven sections. Delving into this part of your proposal can certainly take a while. However, we have developed a business proposal template you can download to help you get started.
The six sections you should address in your business proposal include:
- Introduction: Start by introducing your company and mission in a way that relates to your potential client’s needs. Highlight what distinguishes your company, your accomplishments, your credentials, and any awards. Aim to keep this section to one page.
- Executive Summary: This is where you should present the case for why you are the right company for the job, and give the reader the key message of the proposal. Focus on the conclusions you want the reader to reach after reading it.
- Table of Contents (optional): A table of contents can be useful for longer proposals with many details. List each section with their corresponding page number. In general, we recommend keeping your proposal as short as possible—most proposals shouldn’t need this extra section.
- Body: This is where you can answer the “who, what, where, when, how, and why” questions. Include information on scheduling, logistics, and pricing. You can use data charts to illustrate essential concepts, and can also include testimonials from past clients and a link to your website.
- Conclusion: End with a call to action that encourages the reader to contact you or visit your website for more information. Ideally, you want your client to take immediate action on something, even if it is something small.
- Appendix: This optional section can include information that might not fit well in the body of your proposal. For example, you can include staff resumes or additional graphs, projections, and customer testimonials.
Pro tip: As you write your proposal, you’ll probably keep referring back to old emails and notes to find the “who, what, where, when, how, and why.” A CRM is a great place to store these important pieces of information. In particular, custom fields remind you and your employees to collect this information and make it easy to access in the future.
For example, an IT company needs to track pre-sale owners for their deals to add the pre-sale engineers by name to their proposals—and to pay their commissions. By adding these fields to the opportunity in their CRM, the information is readily accessible when it comes time to write a formal proposal and pay commissions.
The number of custom fields you can add will depend on the CRM you choose. Salesforce Essentials offers users the ability to add five custom fields in the Essential plan. Sign up for your free trial today to see how Salesforce can help you better manage the unique requirements of your business.
5. Edit Your Business Proposal
First, proofread your proposal before sending it to a prospect. Whenever possible, send it to somebody else to read over. A second set of eyes can catch errors you may not see. Many word processing tools allow you to track changes on shared documents, giving you a record of peer comments or suggested corrections.
Second, pay attention to the tone and length of your proposal. In particular, make sure your proposal is short enough to read in a single sitting and contains language that is professional, yet clear.
Make Use of the Appendix
Any extra information, such as testimonials, graphs, and charts, can be moved to the Appendix. As far as the length goes, keep an eye out for repetition. Rather than emphasize your value proposition repeatedly, find a single example that drives your point home: “How much do we care about our customers? Our phone line is open 24/7 and we respond to all emails within 30 minutes or less.”
Watch for Business Proposal Tone & Language
Make sure you use clear, concise, and simple language that avoids industry jargon and technical terms. At the same time, avoid using hyperbole that exaggerates your company or service (“Our groundbreaking product quadruples sales”), as this may undermine the trust you are trying to foster with your potential client. In addition, use the same casual-meets-formal tone you would use in their office during a meeting.
6. Send Out Your Business Proposal
Once your business proposal is complete, you should send it to your main point of contact and primary decision-maker. If you’re unsure exactly who should receive it, don’t be afraid to ask. This makes sure that all of the key people have the information and can provide feedback or gain buy-in. It also prevents delays later in the process that occurs when the right people don’t have the information they need to make a decision.
In the majority of cases, you can send your proposal via an email attachment. It is best to send it as an attachment rather than within the body of the email to reduce the risk that key details are lost in a long message chain or cut off when printed or forwarded. However, some businesses require you to log in to their portal and enter your proposal details or submit your proposal’s costs on their provided forms.
Pro tip: If you regularly send your business proposals through email, it is also a good idea to consider using email tracking software. This will help you make sure your email arrived at its intended destination, and will let you know when the recipient opens your message. You can then plan a follow-up to see if they have any questions.
7. Follow Up
If you’ve written a proposal before, you know the work is hardly over after you click “send.” Following up with a client to give them a reminder and to answer questions is a key part of the proposal process. We have written an article on several different types of follow-up messages you may use, as well as a range of example email follow-up templates.
Waiting for the perfect time to follow up should be a simple, but significant, part of your proposal strategy. A prospect will be more open to a follow-up conversation when your proposal is fresh on their mind—whether they gave it a full read-through or a quick glance.
This is why CRMs are critical for salespeople. In addition to helping you keep track of your customer’s contact details, they can also be a great tool for staying on top of open proposals. Salesforce Essentials gives you the ability to manage your contacts, leads, and even the proceeds resulting from successful deals, all within a single program.
After You Win the Contract
While you might be thinking the challenge ends with a signed contract, this is not precisely the case. As any small business owner can attest, it’s imperative to apply the same level of organization to implementation and ongoing support. This means answering questions that come up and executing on the deliverables outlined in your proposal.
It’s also very important to remember that while this may be the end of your new customer sales process, it’s also the beginning of a new customer relationship. When I was at a business-to-business (B2B) software startup, we sent videos that had the sales rep introduce the onboarding team member, who explained what would happen next to get them started. You can also send a welcome packet or make a phone call welcoming them as your newest client and go over any questions.
Business Proposal Tips
There are many formats you can use to create a business proposal, depending on the needs of your specific business. While our downloadable template is a great way to help you get started, you should update it to include your company branding and unique offerings. The format you choose should be designed to capture a buyer’s attention and help your proposal stand out from the competition.
Here are several business proposal formatting tips:
- Hire a designer or use professional templates: Business proposals are more professional-looking when you use custom-designed templates or if you hire a designer to create them for you.
- Use callouts for important points: This can be done by using callouts to highlight how your solution solves your customer’s pain points.
- Use line items and bullet points: Using line items and bullet points makes your business proposals less dense and easier to read. Making your business proposal easier to read increases your odds of it being read and perceived in a more favorable light.
In terms of how to write a business proposal, the most important thing is to try to think like your client. If you can put yourself in their shoes, you will be better able to explain why your company is the best for the job and anticipate all the questions they may have along the way.